‘Rural Income and Employment Diversity in India during 1994 and 2005’, Journal of Developing Societies, 25(2): June 2009.

Summary: – This paper assesses the structure of rural income and employment according to source in India. It probes the size and role of ‘rural nonfarm employment’ in poverty alleviation. Data from two nationally representative rural sample surveys (33230 and 27010 households respectively) with reference years 1993-4 and 2004-5 are subjected to multinomial logit and CLAD regressions to explore importance of diversity of income sources across states and regions. These are rare data on direct household income estimates in the multi-model survey context having advantage of many household and village level determinants suitable for advanced analysis. Evidence suggests considerable income diversification over the reference decade, but distribution of shares suggests that top most quintile draw almost all of the benefits of recent economic growth in India. The economic linkage between the RNFE and rural wage rates has reduced and almost not existent during the later reference year in analysis.

Tuesday, December 8, 2009

It was 1970 when Alvin Toffler’s book Future Shock shook the imagination of millions in developing countries as to how the western way of life and markets threatened the future of humanity. His shock was emanated not only from the western ‘waste’ or ‘greed’ but also from the ‘pace of change that took place’ since the second war and great depression – in other words the miracle of the free market. It is the same free market that we are now after to seek solutions for mitigating the impact of climate change; while the same western economies are contemplating ‘punitive’ carbon tariffs and taxes which can threaten the very development of the developing societies. Market disorientation and not just a psychological one, is round the corner which threatens the very development of emerging India.

At the turn of 21st century we are at the verge of another ‘Shock’ that will be felt directly not by us but our progeny. The scientists say that the current CO_2 emission concentration has reached 430 parts per million in 2008 which is 17% higher than 280 ppm before the industrial revolution. Such a fast change and given much larger and faster industrialization process it is likely to cross over 1200 ppm by the end of this century which can lead to 50C increase in global temperature. Note that the world have experienced about as much, 50C increase in temperature since the ice age which was long-long ago. Thus we are at the verge of another ‘Future Shock’ that too with ‘the pace of change that we have never ever experienced in the past’.

India’s position in global climate change can be gauged through two well researched numbers:

Comparative Energy Use Criteria: It is estimated that in 2005 India needed 201 Kgs per capita of coal equivalent to sustain its overall economy. Compare this with the USA which expended 60 time more coal equivalent energy per capita than India; The UK, Germany and USSR did about 30 times more; and , Brazil, China and Turkey about 3 time more compared with what India used.

The second comparison is of the direct CO_2 Emissions: India contributes just about 2 tonnes of CO_2 equivalent per person, compared with Australia and USA which contributes over 12 times more; Japan and the EU about 5 times, and China and Brazil about 3 times more than India. Even in such an outcome measure India stands out to be inconsequential. A good comparison however is between China and USA. While China, being most populous in the world, adds a total of 7.2 billion tonnes of CO_2 in absolute terms, and the USA adds 7.1 billion tonnes due to very high per capita use. India with least amount of percapita emissions does add 1.9 billion tonnes of CO_2 in absolute measure due to the second highest population size. On the other hand Australia which has the highest per capita amount contributes just about one half of a billion tonnes.

The evidence that India is not a delinquent yet and its contribution to the global pollution is probably the least measured through both the ‘use’ and ‘outcome per capita’ terms gets somewhat dented when absolute contribution is looked into. This absolute contribution is what makes India an important player in the game of climate change, and it should use this as an opportunity. Although India is an economy which is trapped between the first wave (agricultural revolution) and the second wave (industrial revolution); it has shown its mark even in the third wave (IT based super industrialization) of economic growth. India appears unique where two-thirds labor force is trapped in farming and unorganized sector employment; but has fairly large industrial and manufacturing base (notwithstanding cars and steel) yet also in the forefront of services sector growth which now contributes closer to 60 % of GDP. No country on the earth faces all these three different economic growth phases that too at the same time! Large number of households follows sedentary agrarian lifestyle, burning wood, consumption of barely processed cereals; self produced food and other local items and so on; while at the same time India is now considered one of the largest market for modern goods and services. Indian enigma and puzzle continue in this modern age as well.

Now the Dharma Sankat is who should share the burden of global warming. It appears fair and logical that the per capita basis should be the benchmark; but there is danger lurking that Lord Brahma can get annihilated sooner than later. Since the Copenhagen Summit is more likely to put some acceptable benchmarks for the future policies, it is important for India to be leading rather than pleading. It is neither a matter of national shame nor will it mean abrogating national sovereignty to take a proactive role in international negotiations by announcing a willingness to do our bit to the World unilaterally. While doing so it is common and often needed to seek partners and promote coalitions and in this case it appears it is India, China, Brazil, USA and possibly Russia. Note that India has done well by partnering with both erstwhile superpowers – (USA and Russia notwithstanding continuing rivalry between the two) through respective nuclear deals which are complimentary and benefitting India. In my view it is the farsightedness and firmness of Dr. Manmohan Singh that has prevailed in these missions not only to withstand the domestic opposition, but also negotiating with the outside world while keeping the interest of the poor and industry at the same time. If this is not a cleaver tight rope walking success then what else can it be? It would be fair to ask the opposition voices within the Indian Parliament not to behave like sulking kids while unaware of the pressures of future energy needs and responsible global partnerships in issues as sensitive as climate change.

Note that not far ago, it was India who took a firm stand against opening of the Indian Agriculture almost stalling the relevance of Doha round of WTO negotiations. It is difficult to judge whether this stand is good or bad, but a stand was taken which has maintained the statusquo with respect to the subsistence agriculture. But the weakness of India is in its ignorance - we have little if at all research and knowledge about our own way of life including way of production, consumption and sustenance of life. This can also be said about as to how we are drawing upon resources to meet the energy needs. India must take a lead in generating knowledge through research on as to how to mitigate and arrest the adverse impacts of global warming. India indeed can be a laboratory for assessing climate change impact on a range of agro-climatic and geographical regions since it is one of most diverse country on earth so far as natural formations are concerned.

There is a growing debate that large climate changes are already underway through global warming, and that it adversely affects agriculture, food security and sustainability of long term growth in India and other parts of South Asia. The evidence is an increase in levels of temperatures which could cause havoc in physical systems for example, by disappearing glaciers in the Himalayan mountain range which could flood large tracks of cultivable lands in the foot hills and indo-gangetic plains of northern India. The warming on the other hand can be increasing the occurrence of drought and depletion of arable land in the Deccan plateau. Besides, the global causes which are increasing average temperatures even in South Asia, common practices such as increasing use of fossil fuels, burning of wood and biomass for domestic use, and also fast pace of deforestation is enhancing adverse effect of climate change in both physical and biological systems in this region. Indiscriminate overexploitation of ground water for cultivation has become one of the major problems facing Indian agriculture during the recent years. It is therefore important to find out if there are processes or programs which are intended to mitigate the impact of climate change or identify parameters which will help devise adaptation strategies to overcome adverse impact of climate change.

There is a need to conceptualize and devise a comprehensive ‘natural resources framework (NRF)’ which will encompass both exogenous and endogenous relationships and facilitate assessment of the net effects between economic activities and climate change. The literature consists of a number of approaches to measure the forward link namely economic impacts of climate change but not the endogenous association of climate change due to enhanced economic activity. Climate change resulting from human causes has been increasing during the past few decades (United Nations Environment Program, 2007), especially due to human and animal activity, and change in land use patterns such as multiple cropping, alternative use of land such as deforestation for crop cultivation, and urbanization and so on. Further, there are factors known as ‘feedbacks’ that amplify or reduce effects on climate change; for example conflicting role of ‘water vapor’ on agricultural production. It would be appropriate in this context to assess the role of mega government work program namely the National Rural Employment Guarantee Scheme. The nregs linked manual labor inputs are being used to sustain and create for example small water bodies, undertake rain water harvesting and appropriately mend the water flow of streams and brooks so as to improve the micro-water sheds across rural India.In this connection we can further explore if we have a record of practices that promote pollution and ill health; either due to our cultural practices or sheer poverty, and lack of modern knowledge including limited infrastructure and so on. Practically all our energy (electricity) needs are met by burning cheap and bad quality coal, our hearths are warmed up burning wood and agricultural residue, inefficient technologies are used to drain the ground water table causing desertification of large tracks of farming land and also causing salination in the coastal areas. We already are experiencing pressures on access to potable water even in such places which hitherto considered easy sources in our forest areas. Whether, all these cause and effects are due to climate change or not is not what we need to be debating about, but as to how to address these issues for our own good, lest climate change accentuates already prevailing adverse effects.

It is important also to know that we are not alone in this world of 7 billion and growing. The El Nino/La Nina effect of southern Pacific can reach as far as India and this natural phenomenon has been scientifically validated. There is no reason to suspect that ‘climate change’ is not going to affect us Indians in a global context. Then let us build upon the national pride and economic might that India has acquired during last two decades, and be a change agent and leader in the context of Copenhagen not be apologetic about it.

My Profile

Abusaleh Shariff is Chief Scholar at the US-India Policy Institute, Washington DC (since 2012) and President, Centre for Research and Debates in Development Policy, New Delhi (www.crddp.in). He Was a Chief Economist at the National Council of Applied Economic Research, New Delhi (1994- 2012). He also worked as Senior Research Fellow at the. Food Policy Research Institute, Washington D C 2008 -10. He was advisor (under a committee setting) to the Indian Prime Minister during 2004-6 and the Ministry of Home Affairs, Government of India during 2010-11 in the areas of inter-state relations and inclusive development policy reforms. Was on teaching assignments at various levels between 1973 to 1994. Was on teaching assignments at various levels between 1973 to 1994. He was nominated to the 13th (Indian) Finance Commission by the Finance Ministry, Government of India.